Jim Rickards: War with North Korea Will Cause Gold to Hit $10,000 an Ounce

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.

Renowned investor and longtime goldbug Jim Rickards made a shocking gold price prediction in a recent interview with Kitco News

jim rickards

“I expect to see gold hit $5,000 and eventually to $10,000 an ounce,” said Rickards.

The question is, what are the catalysts that could take gold this high?

According to Rickards, it comes down to two very important factors…

War with North Korea will send gold (and stocks) skyrocketing, said Rickards.

“This is a very serious threat and we are headed for war with North Korea,” said Rickards. “While I don’t know what it will take to not just get gold to go up but stocks and other sectors, ultimately markets are going to be impacted.”

However, Rickards cited another factor that will cause gold to soar past analysts’ expectations in the near future: the looming debt ceiling.

“We’re coming up against a debt ceiling and budget train wreck,” said Rickards. “The U.S. budget is at D-Day at the end of September.”

What exactly is this “train wreck,” and how can you prepare for “D-Day”? Read on, because this is something Money Morning Resource Specialist Peter Krauth has warned you about before… And he’s found a company that will help protect investors from the coming storm.

Gold Prices Are Set to Rise This Month – Here’s What to Do

In just 24 days, members of Congress must agree to raise – or not to raise – the debt ceiling.

The debt ceiling limits how much debt the federal government can carry at any given time. Right now, the current debt level of $19.9 trillion is just a hair away from the $20.1 trillion ceiling.

And unless Congress agrees to raise the ceiling by the deadline, the government will essentially run out of money and will no longer be able to cover its expenses.


Jim Rickards believes gold will hit $10,000 an ounce. Source: Kitco News

As dysfunctional as Congress is, it’s unlikely they’ll allow that to happen. But too much partisan bickering as the deadline approaches could cause a credit downgrade. Right now, the United States has an immaculate AAA credit rating – meaning the country has the smallest risk of not paying back debts. However, hostile politics leading up to a debt ceiling deadline could urge ratings agencies, like Fitch, to downgrade that rating to AA.

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For example, on Aug. 5, 2011, S&P downgraded the United States’ credit rating for precisely that reason. This immediately resulted in a stock market sell-off. The Dow Jones plunged 2.7% over the following month.

If the debt ceiling isn’t lifted by the deadline and a ratings agency like Fitch or S&P issues a downgrade, a sell-off as big as 2.7% is certainly possible.

But here’s the kicker: This would likely boost gold prices, as investors would rush to hedge their portfolios against the market dive.

In fact, the Aug. 5, 2011, downgrade sent gold prices soaring 13.6% in just one month.

According to Peter, this event would help lift gold to his bullish end-of-year price target. Peter’s target is a little more realistic than Rickards’ bullish $5,000 or $10,000 prediction…

“I will keep you updated on this major deadline as it gets closer in the coming weeks,” Peter told Money Morning Members on Aug. 25. “I believe the gold price can reach $1,400 by the end of the year.”

And for investors looking to play the gold sector as the price of gold soars, one of the best ways is through royalty/streaming companies like Osisko Gold Royalties Ltd. (NYSE: OR).

You see, Osisko has more than 130 royalties and streams, including five top-tier assets and a 5% New Smelter Return (NSR) on Canada’s largest gold mines. What’s more, OR is up 41.3% year to date.

“Osisko Royalties offers a nice yield at an attractive price, while offering protection against inflation and massive upside potential,” said Peter on Aug. 23. “This company could be exactly what U.S. retirees are looking for to safeguard against the dangerous rising tide of inflation.”

Take today’s market moves as a prime example. While the Dow has dipped 1.09%, OR is up 1.74%. Talk about a safeguard.

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The post Jim Rickards: War with North Korea Will Cause Gold to Hit $10,000 an Ounce appeared first on Money Morning – We Make Investing Profitable.

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